UPDATE 3-Oil steady on diesel supply concerns

                                
 (Updates prices)
                                
 By Ikuko Kao
                                
 LONDON, April 8 (Reuters) - Oil held steady around $109 on
Tuesday on concerns that a refinery problem in Europe will
further tighten fuel supplies in the region.
                                
 U.S. crude <CLc1> dipped by 29 cents to $108.80 a barrel at
1042 GMT, after Monday's $3 jump. London Brent crude <LCOc1> was
26 cents down at $106.89.
                                
 London's gas oil futures <LGOc1> hit a record high of $1,017
a tonne, scaling new peaks for the second day running.
                                
 On Monday Finnish refiner Neste Oil said repairs on a diesel
unit at its 200,000-barrels per day (bpd) Porvoo plant, a
leading supplier of high quality fuels to Europe, will stretch
through May following a fire on Friday.
                                
 European diesel supplies have been tight since last year due
to a stricter environmental regulations and refinery outages.
                                
 "Most of the support to the oil complex is still coming from
the middle distillate part," Olivier Jakob with Petromatrix said
in a research note. "Diesel has been supported with fire at the
Porvoo refinery."
                                
 Distillate supplies, including diesel and heating oil, were
also tight in the United States, the world's top energy
consumer.
                                
 A Reuters poll of analysts forecast weekly U.S. inventory
data due out on Wednesday will show a 1.4 million barrel drop in
distillate stocks for the week to April 4.
                                
 Crude oil inventories were seen rising 2.2 million barrels
and gasoline down 2.6 million barrels. [EIA/S]
                                
 Further adding support to the market, Iran said it had
started to set up advanced centrifuges at a uranium enrichment
facility.
                                
 OPEC's second largest oil producer, Iran has been in a long
standing row with the West over its nuclear programmes, which
oil investors fear might lead to supply disruptions.
[ID:nL08684321]
                                
 U.S. and Brent crude prices have remained above $100 most of
the time since early March, repeatedly prompting the United
States to call on OPEC to lift production levels.
                                
 On Monday U.S. Energy Secretary Sam Bodman refreshed the
call and he warned that U.S. gasoline pump prices could hit a
record $3.50 a gallon during the peak summer driving season.
[ID:nN07180229]
                                
 OPEC President Chakib Khelil, however, said on Tuesday high
oil prices were not caused by a shortage of crude and he saw no
need for OPEC to increase its oil supply.
                                
 "There is really no need for increasing the supply," Khelil
said, answering questions at an industry conference.
                                
 He said that in his view the fall in the dollar will
continue to influence oil prices, near record highs.
[nL08570736]
                                
 Oil minister of OPEC-member Qatar, Abdullah al-Attiyah,
echoed a similar view. He told all-Hayat newspaper that a global
inventories were at around five-year highs, and prices were
being driven by speculators. [ID:nL0812923]
                                
 OPEC Secretary-General Abdullah al-Badri also told an
Iranian daily paper that current oil prices were "proper" and
"fair". [ID:nHOS821572]
                                
 (Additional reporting by Luke Pachymuthu in Singapore)